Have I got a deal for you! How would you like an investment that promises you a guaranteed return on your equity of more than 11 percent, no matter what happens in the marketplace or how the company's product actually performs? Believe it or not, that's exactly the kind of sweetheart deal that FirstEnergy is trying to lock in for the next 15 years for its aging power plants, on the backs of Ohio electricity customers.
I traveled to Columbus this week for the start of six weeks of hearings at the Public Utilities Commission of Ohio (PUCO), where FirstEnergy is seeking a bailout for three coal plants and a nuclear plant, all of which compete poorly in a competitive market against cleaner sources of energy like wind. I was there both because there's a lot at stake in this case for Ohio - a lot of air and water and climate pollution, customer dollars, and clean energy opportunity - and also because it's a bellwether that has national implications for a coal industry at the crossroads.
Over the past year, our Ohio Beyond Coal team has been fighting proposals from the state's largest utility companies to seek customer-funded bailouts of dirty and outdated coal plants. After the state utilities commission denied two previous, similar proposals from Duke and AEP, FirstEnergy's scheme is the most egregious we've seen yet, with a projected loss of $3 billion to customers. It would literally guarantee profits for the company's shareholders until 2031 while saddling the expected cost of maintaining inefficient and polluting coal plants entirely on their customers. FirstEnergy already attempted to eliminate the competition by scuttling the state's clean energy standard, which is now suspended, but these plants still can't compete.
David Roberts of Vox summed it up well, in his excellent new post about the whole debacle: "The company can't sell its product on a competitive market, so it's asking the state to force customers to buy it. For fifteen years."
But thanks to hard-working Beyond Coal activists, including our friends at Earthjustice, Ohioans aren't buying FirstEnergy's rhetoric about this plan -- and neither is the media. Numerous newspaper editorial boards have called this plan a sham. Just look at some of these columns and news articles - like this quote from the Toledo Blade:
The subsidy proposal amounts to FirstEnergy's concession that the affected plants can't compete in the state's energy market. That failure shouldn't be borne by ratepayers or employers who may be forced to choose between keeping jobs and paying higher energy bills....While President Obama's new Clean Power Plan focuses on renewable energy and enhanced efficiency nationwide, Ohio continues to move in the opposite direction and maintain its over-reliance on fossil fuels. The FirstEnergy proposal, if approved, would widen that gap.
Recently it emerged that should costs soar unexpectedly in the next 15 years for FirstEnergy's last coal-fired power plant in Ohio or its Davis-Besse nuclear plant, customers rather than the company would be stuck paying the extra bills under the utility's proposed rate plan.
Monday's first hearing started off with this great column by Ohio Sierra Club's own Daniel Sawmiller.
FirstEnergy has a history of making bad bets and then losing big. Ohio families and businesses shouldn't be forced to underwrite their gambles, and our communities certainly shouldn't be responsible for bailing out their bad business decisions. The Public Utilities Commission of Ohio should protect Ohio's electricity customers and stay the course in rejecting these misguided attempts at corporate welfare.
The FirstEnergy hearings will continue for some time. While this campaign is far from over - we are also ramping up the pressure for an even larger bailout request from AEP pending before the PUCO after this one wraps up - we have a solid team making sure that FirstEnergy is held accountable. While I was in Columbus, I was struck by both the pivotal role our advocacy plays, and the dedication of the team doing the work.
The coal industry's strategy for keeping its iron grip on the electric sector for the past century has been rigging the game in their favor in the marketplace, whether that meant skirting worker protections or the violating the most rudimentary environmental standards (for example, blowing up mountains). So now that coal is facing serious financial headwinds, the industry is trying again to doing what it has always done - using its clout and connections to rig the game and insulate itself from change.
And if it weren't for the advocates drawing a line in the sand, both inside and outside the hearing room, the utility would have its way, something they have freely enjoyed in the byzantine world of utility commission proceedings for decades, until the rush to build 200 coal plants brought advocates into those venues, in a new way. And we're still there.
This is expected to be a six-week-long proceeding (to be immediately followed by another one of similar length for AEP), and while FirstEnergy can rotate out its battalion of corporate lawyers, we have a small contingent of dedicated experts - including attorneys from Earthjustice and Sierra Club - who are moving into hotels, giving up their lives, and doing sophisticated, exhausting work. They are my heroes.
We plan on defeating this boondoggle, just as we have with the previous two utilities that tried and failed to chain the state to the past. And we've also got our eye on the AEP proceeding ahead, including pushing for more details about AEP's plans and preparing for upcoming public hearings, where customers will get to voice their opinion on AEP's next proposed coal bailout. Ohioans should be enjoying the benefits of a clean energy economy, rather than being forced to foot the bill for dirty, outdated coal plants.